U.S. and China On Trade War Over Rare Earth Export Restriction

The Obama administration is all set to file a case against China's export restrictions on rare earth at the World Trade Organization. Photo: REUTERS

The Obama administration is all set to file a case against China's export restrictions on rare earth at the World Trade Organization.

The new step highlights mounting tensions between the two nations due to China's imposed restrictions over resources that are required for the production of materials like computers, cars batteries and even missiles.

Countries like Japan and the European Union will reportedly support the United States in its case. The U.S. maintains that the restrictions imposed by China, the world's largest producer of rare earth, led to increase in prices.

It was in September 2009 that China announced plans to reduce its export quota to 35,000 tons per year in 2010-2015, in a bid to conserve the resources and thereby protect the environment. Following this, at the end of 2010, China reportedly announced that the first round of export quotas in 2011 for rare earths would be 14,446 tons, which was a 35 percent decrease from the previous first round of quotas in 2010.

Further export quotas were announced by the nation in 2011 along with a complete halt in production of three of its eight major rare earth mines which produces almost 40 percent of the nation's total rare earth.

However, as opposed to China's claims of protecting their natural resources, there have also been concerns that Beijing has implemented these quotas in a bid to ensure that prices of these elements remain low within China, a move that critics say gives its manufacturers an unfair advantage, the BBC reported.